Coinbase Waives Transaction Fees for PayPal's Stablecoin, PYUSD, Enabling Direct Redemption into US Dollars

The move is part of a broader partnership between Coinbase and PayPal to boost adoption of PYUSD, the dollar-pegged stablecoin launched by PayPal in 2023.

Coinbase is rolling out free transaction fees for PayPal’s stablecoin, PYUSD, and will enable direct redemption into U.S. dollars, part of a broader partnership to boost adoption of the token, the two companies announced Wednesday.

The move will also see merchants on PayPal’s network be able to settle transactions in PYUSD, bypassing traditional payment rails.

“This partnership brings together the consumer reach of PayPal and the institutional access of Coinbase,” said Jose Fernandez da Ponte, PayPal’s head of blockchain and digital currencies. “It creates a powerful combination to move stablecoin payments into the mainstream.”

Meanwhile, PayPal will soon offer U.S. users a 3.7% annual return on its dollar-backed stablecoin as part of a broader push to grow its presence in digital assets.

The move is designed to boost adoption of PYUSD by making it more competitive in the stablecoin market, where it lags behind leaders like Tether (USDT). PYUSD currently has a market cap of around $868 million, compared to Tether’s $143 billion.

Stablecoins, which are designed to maintain a 1:1 peg with fiat currencies like the U.S. dollar, are widely used in crypto trading for fast and low-cost transfers between assets. The global market for stablecoins now exceeds $238 billion, according to CoinGecko.

Coinbase previously reserved zero-fee treatment for only one stablecoin—Circle’s USDC, the second-largest stablecoin by market value.

“People will choose between PYUSD and USDC for different use cases,” Fernandez da Ponte said. “We want PYUSD to be the preferred stablecoin for payments.”

The two companies also plan to expand PYUSD’s use across decentralized finance (DeFi) applications and explore new utility-focused features. Coinbase’s Lauren Abendschein, global head of institutional sales, called the partnership “a step forward in building the future of global payments.”

The announcement comes amid growing momentum in Washington for stablecoin regulation. Both the House and Senate advanced legislation to establish a regulatory framework, and the White House said it wants a bill signed into law by August.

President Donald Trump has taken a more supportive stance toward digital assets, including appointing crypto-friendly regulators and signing an executive order to establish a strategic cryptocurrency reserve. Trump Media & Technology Group (MAGA), majority-owned by the president, recently signed a binding agreement with e8 Token to roll out retail investment products—crypto included—as part of its financial services expansion.